MRSH — Q3 2026 Financial Report Analysis

A one-off gain and a one-off charge cancel out; underneath, 5% organic growth and flat margins

Marsh & McLennan Companies (which trades as Marsh, ticker MRSH) grew third-quarter 2026 revenue 8% to $6.86 billion, and GAAP diluted EPS rose 12% to $1.69. Both headline numbers are cleaner than they look in one way and less clean in another. Two large one-time items sit inside the quarter: a $126 million accounting gain booked as revenue when Marsh bought out a Spanish broker it already part-owned, and a further $144 million charge (net of insurance) to settle the Greensill litigation. At the operating level they almost cancel. Strip out currency, acquisitions and that gain, and revenue grew 5%, the same pace as last quarter. Profit margins on the company's own adjusted basis did not move. Most of the extra EPS growth came from below the operating line: a lower tax rate and 3% fewer shares.

At a glance

• 5% underlying revenue growth (no currency or acquisition effects): steady, and again led by consulting (+8%) rather than insurance broking (+3%).
• Adjusted operating margin 22.7%, unchanged from a year ago: the cost program has not yet shown up as wider margins, even after Marsh raised its savings target to about $600 million a year.
• GAAP EPS +12% vs operating income +4%: the gap is a tax rate that fell to 21.3% from 25.1% (partly because the one-off gain was lightly taxed) and a 3% lower share count from buybacks.

Key figures

Source: Form 10-Q for the quarter ended September 30, 2026, plus the Q3 2026 earnings release (Exhibit 99.1 to the October 15, 2026 8-K) for the adjusted figures. Percentage changes are computed from the reported figures. Q3 is seasonally Marsh's smallest quarter for profit, so these margins are not comparable with Q2's.

Where the growth came from

Marsh buys a steady stream of smaller brokers and consultancies, so the headline growth rate mixes organic growth with purchased revenue. The company's underlying revenue growth removes currency movements, acquisitions, disposals and one-off items like this quarter's gain. It is the closest thing to "same business, same exchange rates, year over year."

Of the $512 million revenue increase, the 10-Q's reconciliation attributes $170 million to acquisitions and other items in the Risk business, and $126 million of that is the Deasterra gain. In July Marsh bought the remaining 60% of Deasterra Partners, a Spain-based broker it already owned 40% of. Accounting rules require the old 40% stake to be revalued to fair value on the day control changes, and the resulting $126 million paper gain is booked inside revenue. It brings in no cash and will not recur. Excluding it, revenue grew about 6% to roughly $6.74 billion. Currency had almost no effect this quarter (a $3 million swing in broking, $6 million in consulting), unlike the first half, when the weaker dollar added 1-2 points.

Note: Risk's reported growth includes the Deasterra gain. Fiduciary interest ($100M) is reported separately within Risk & Insurance Services.

Risk & Insurance Services: more clients, cheaper insurance

Marsh Risk grew 5% on an underlying basis, a point faster than in Q2. The 10-Q gives the same explanation as last quarter: growth was "driven by higher new business and renewal revenue, partially offset by declining insurance premium rates." Brokers are mostly paid a percentage of the premium their clients pay, so when insurers cut prices, Marsh earns less on the same policy and has to win more business to grow. U.S./Canada grew 4%. International grew 6%: EMEA 7%, Asia Pacific 4%, and Latin America was flat after growing 8% in Q2.

Reinsurance (the insurance that insurance companies buy for themselves) fell 6% to $374 million, "driven primarily by declining reinsurance premium rates." That is worse than Q2's 2% decline. Q3 is a small quarter for this business ($374 million out of $2.3 billion for the first nine months), because most reinsurance contracts renew at the start of the year and mid-year, so the percentage moves on a small base. It is still the second quarter in a row of falling revenue.

Fiduciary interest, the interest Marsh earns on client premiums it holds before passing them to insurers, fell $9 million to $100 million "due to lower average interest rates." This income costs almost nothing to earn, so the decline comes nearly straight out of profit.

Margins. The segment's GAAP operating margin (the share of revenue left after running the business, before interest and tax) fell to 17.8% from 19.2%, and operating income slipped to $745 million from $750 million. That GAAP figure includes the $144 million Greensill charge, the $126 million gain, $44 million of restructuring, $33 million of McGriff integration and retention costs, and a new $30 million of legal costs from a lawsuit Marsh brought against a competitor over restrictive covenants (agreements limiting what departing staff can do). On the company's adjusted basis, which removes all of those plus amortization of acquired intangibles, the segment margin was 24.6% versus 24.7% a year ago. The 10-Q attributes cost growth to "increased compensation and benefits, driven primarily by higher base salaries."

Consulting: still the faster-growing half

Consulting revenue rose 9% (8% underlying) to $2.69 billion, and GAAP operating income rose 12% to $563 million, lifting the margin to 21.0% from 20.3%. On the adjusted basis the margin was flat at 22.1%, because last year's quarter carried more restructuring cost.

• Marsh Management Consulting grew 14% on both a reported and underlying basis, its fastest pace this year (13% in Q2). The 10-Q again credits "growth in most regions."
• People and Investments grew 5% underlying. Investments and Retirement rose 8%, "driven by investment management, primarily reflecting positive net flows from new business and the impact of capital markets." Part of that depends on market levels, because fees on managed assets rise when markets rise. Health and Benefits grew 5%. Workforce and Rewards fell 1%, reflecting "a decline in International, partially offset by growth in the U.S."

Consulting expenses rose 8%, "driven by higher incentive compensation and base salaries."

What the headline numbers hide

• The one-offs roughly cancel at the operating line but not at the EPS line. The $126 million gain and the $144 million Greensill charge net to about -$18 million of operating income. But the 10-Q says the tax effect of the gain alone cut the quarter's effective tax rate by 2.8 points. The rate fell to 21.3% from 25.1%. Pre-tax income grew only 2.3%, to $1,033 million, while net income attributable to Marsh grew 8.2%. A lower share of profit going to minority partners ($4 million vs $10 million) helped too.
• Buybacks did the rest of the EPS work. Marsh repurchased 2.7 million shares for $500 million in Q3 and 11.4 million for $2.0 billion in nine months (versus $1.0 billion a year earlier). Diluted shares fell 3% to 479 million, which is why EPS (+11.9%) outgrew net income (+8.2%).
• The adjusted measure is the better guide this quarter, and it says +10%, not +12%. Adjusted EPS of $2.03 removes $312 million of pre-tax items: Greensill ($144M), amortization of acquired intangibles ($142M), restructuring ($79M), McGriff costs ($35M), the competitor lawsuit ($30M) and earn-out changes ($12M), less the Deasterra gain ($126M) and $4M of small gains. It also takes out $48 million of pension "other net benefit credits", which works against the company's own adjusted number.
• Greensill is finally said to be finished, but cost more than first thought. After the Q1 charge, Marsh had a recorded liability that reflected the Greensill Bank settlement plus an estimate for the remaining Credit Suisse claims in Australia. Q3 added $144 million, bringing the nine-month total to $569 million net of insurance. The 10-Q now says the settlements with White Oak, Greensill Bank and Credit Suisse "conclude Marsh's involvement in the Australian proceedings" and the company does "not expect to incur any further charges."
• Cash conversion weakened. Operating cash flow for nine months was $2.31 billion against net income of $3.29 billion (about 70%), down from $3.13 billion against $3.40 billion a year earlier (about 92%). Two visible causes: receivables absorbed $872 million of cash versus $388 million last year, and restructuring cash spending rose to $222 million from $138 million. The 10-Q does not break out when the Greensill settlement cash is paid.
• Shareholder payouts are running ahead of operating cash. Nine-month buybacks ($2.0 billion) plus dividends ($1.4 billion) exceeded operating cash flow ($2.3 billion). The difference was covered partly by $1.6 billion of commercial paper (short-term borrowing at an average 4.13%) that did not exist at year-end, and corporate cash fell to $1.84 billion from $2.69 billion. Credit ratings are A-/A3 with stable outlooks, so this is not a strain, but it is borrowing, not surplus cash.

Did last time's read hold up?

Our Q2 report said broking organic growth had "settled around 3%," that consolidated growth near 5% depended on Consulting holding up, and that margins would only improve if Thrive savings outran wage inflation. Two of those held: Risk & Insurance Services grew 3% again (with Reinsurance weakening to -6%), and Consulting accelerated to 8% underlying, keeping the group at 5%. The margin test has not been passed: the adjusted margin was flat at 22.7%, though compensation costs grew 4.7%, slightly slower than the 5% underlying revenue growth, which is the first small sign in that direction. Q2's Greensill liability also turned out not to be the final number.

Takeaway: Strip out a $126 million paper gain counted as revenue and a $144 million Greensill charge, and this was a steady quarter, not a strong one. Organic growth held at 5%, carried by consulting (+8%) while reinsurance shrank 6% on falling prices, and the adjusted margin did not widen. EPS grew 12% mainly because of a lower tax rate, helped by the lightly taxed gain, and 3% fewer shares bought partly with short-term debt. The larger news is Marsh's decision to spend $250 million more on its Thrive program for $200 million more of annual savings, which have yet to show in margins.

Outlook

The 10-Q and earnings release give no numerical guidance for revenue, margins or EPS. The concrete changes this quarter:

• Thrive restructuring program expanded. Expected costs rose to about $750 million (from $500 million) and expected annualized savings to about $600 million (from $400 million), mostly from "process and automation efficiencies and optimization of our global operating model." $310 million had been spent by September 30, mostly severance. Marsh says savings and charges should be spread evenly over the three-year program that began in Q3 2025. It still doesn't disclose how much saving has already reached the income statement.
• Dividend of $0.990 a quarter declared for November; $3.7 billion of buyback authorization remains.
• Greensill: no further charges expected.

Our read: the insurance-pricing headwind shows no sign of easing in this filing. Both Marsh Risk and Reinsurance cite falling premium rates, and fiduciary interest keeps shrinking as interest rates fall. Most reinsurance treaties renew on January 1, so Reinsurance's Q1 2027 results will show whether the decline is deepening. Consulting is doing the heavy lifting, and management consulting at 14% growth is the most cyclical part of the group. The point to watch over the next two or three quarters is whether the adjusted margin starts rising as Thrive savings build. Marsh has now committed $750 million to the program; if margins are still flat a year from now, the larger savings target will be hard to take at face value.